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Rising ‘Stabilizedâ€TM Rents Threaten New Yorkersâ€TM Housing

by Shreema Mehta

June 30, 2006 – New York City residents living in rent-stabilized apartments suffered a blow this week when city officials raised – to its highest percentage in three years – the rate at which landlords can increase rents. Housing advocates say the increases threaten one of the few remaining options moderate-income New Yorkers have for affordable housing.

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Rent is rising all over the nation, displacing low- and middle-income families. The median monthly rental rate for a two-bedroom apartment in San Francisco is about $1,360. It is $940 in Boston and $760 in Chicago. According to Harvard University’s Joint Center for Housing Studies, which calculated those rental prices, they are all too expensive for people who work as janitors, salespersons or nurses.

The New York City Rent Guidelines Board, made up of nine mayoral appointees who supposedly represent tenants, landlords and the general public, was created to control rent prices and set maximum rent increases in a market that would otherwise make housing unattainable.

In the past ten years, the board has consistently raised the rent rate between 2 to 5 percent for one-year leases, making housing increasingly unaffordable. On June 27, the Board voted to allow landlords to raise prices by 4.25 percent for renters with one-year leases and 7.25 percent for those with two-year arrangements.

In New York, the controls apply to apartments that rent for less than $2,000 a month and were built before 1974. More than 1 million housing units in New York are rent-stabilized, representing half of the city’s housing stock, according to the annual housing survey commissioned by the Board. Citywide, about two-thirds of New Yorkers live in rental housing, with the share climbing to about 80 percent in Brooklyn, the Bronx and Manhattan.

Rent is rising all over the nation, displacing low- and middle-income families. Rental prices in several cities are all too expensive for people who work as janitors, salespersons or nurses.

Under the rent hike, an apartment that rented at the 2005 citywide median price of $920 will now cost a tenant with a one-year lease about $959 per month. With a two-year lease, tenants could pay about $987.

Kenneth Rosenfeld is the director of legal services for the advocacy group Northwest Bronx Community and Clergy Coalition, which organizes tenants in upper Manhattan. He said the increases will further erode the safety net that rent stabilization provides for the city’s teachers, government employees and other workers earning average wages.

"The incomes of low- and moderate-income people in the city are going down, not up," he said.

Indeed, the average annual income of rent-stabilized households in the city is $32,000, according to the 2005 survey on housing vacancies conducted by the Guidelines Board, and the incomes of people living in rent-stabilized apartments decreased by 8.6 percent between 2001 and 2004.

"It’s simply increasing the trend that we see in Downtown [Manhattan], where poor people are being forced out," Rosenfeld said. "Frankly I don’t know where people are going to go… the most important program for them to keep affordable housing is rent stabilization."

The increases will further erode the safety net that rent stabilization provides.

Rosenfeld said that New Yorkers can no longer shuffle between other boroughs to find cheaper rents the way they used to; the price hikes have been city-wide.

Patrick Markee, a policy analyst with the Coalition for the Homeless, which advocates for affordable housing, said the consistent increases in rent costs over the years have left many New Yorkers priced out of their apartments. Many of them end up in shelters, he said.

"We see people who have lost their homes, and once they end up homeless they can’t find other apartments," he said. "Homelessness at its root is caused by the severe shortage of affordable housing." Noting that most homeless people have likely lived at one point in rent-stabilized housing," Markee said, "It’s critically important to preserve existing affordable housing."

A 2005 city-commissioned survey of homeless-shelter residents conducted by the Vera Institute of Justice found that 50 percent had experienced an eviction. The Vera Institute carries out research for government organizations on a wide range of social issues,

Debunking the notion that most homeless people are transient, the survey also found that a majority of shelter-bound New Yorkers had "relatively stable" housing histories, with 52 percent of respondents saying they had lived in only one or two residences in the five years prior to entering a homeless shelter.

Harold Lubell, a landlord representative on the Guidelines Board, said the rate increases are not the true cause of displacement of low- and moderate-income people.

"It’s unfortunate there are a lot of people that are poor and just can’t afford to pay rent," he told TNS. "They can’t afford to pay the rent period. [The rent-rate increase] doesn’t have an impact on them."

“We see people who have lost their homes, and once they end up homeless they can’t find other apartments."

Lubell, a real estate attorney who said he has been on the Board for the past 21 years, voted against the increases, arguing that they were not steep enough.

"When you look at the news, it’s very evident that price of fuel is not going down," he said. "Real-estate taxes have gone up substantially. Water charges have gone up. The whole basket of goods that an owner must pay continues to rise."

Yet despite the rising operating costs cited by Lubell and other landlord advocates, in 2003 landlords still netted an average of $255 per residential unit, after paying operating and maintenance costs, according to an annual report released last year by the Rent Guidelines Board itself. In Manhattan, the margins were higher than in the rest of the city: $472 per unit.

The high cost of renting apartments, while still providing a cool surplus to those collecting their rent, is causing many residents to devote more of their income to housing. And that, of course, means less money is left for food, childcare, transportation, health care and other necessities. According to the housing-vacancy survey, about 29 percent of New York City renters spend more than half their income on housing. That’s up from about 25 percent in 2002.

As the rent hikes take their toll, some residents are forced to move to other states. James Staton, a volunteer with the Northwest Bronx Coalition and the New York City AIDS Housing Network, and a Bronx resident, told TNS he is moving his sons to North Carolina for many reasons, including the city’s education system and the high cost of rent. Staton said that after his wife, from whom he was separated, passed away recently, he could not afford to hang onto the $1,600 per month apartment she lived in with their children.

Following the paths many New Yorkers have taken to states with lower costs of living, Staton said moving his children to North Carolina would reduce his housing costs. But nowadays, even migrating to other parts of the country is less attractive, since poor and moderate-income families face a shortage of affordable housing in areas across the United States.

The nation lost more than 1.2 million housing units with rents below $400 a month between 1993 and 2003, while gaining about 1.7 million units that rent above $800 a month. The disparity has created rental shortages not only for low-wage workers, but also for workers earning average incomes, such as nurses and teachers, according to the Center for Housing Studies at Harvard University.

Housing advocates and researchers say that people’s wages have not sufficiently caught up with the increases in housing costs. Staton says his fellow New Yorkers suffer from the gap between earnings and rent.

"As far as how the rents are being increased every year, jobs are becoming worse; minimum wage has been a standstill for quite some time," he said. "It’s not affordable to live here in New York."

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The NewStandard ceased publishing on April 27, 2007.

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This News Article originally appeared in the June 30, 2006 edition of The NewStandard.
Shreema Mehta is a staff journalist.

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